Other Views: Tell UW students how much they’ll pay

Indiana University students just reduced their borrowing by 11 percent — far more than the national average — after the state’s system of seven public campuses made one simple change.

Indiana started sending letters to students detailing what their loan totals and eventual monthly payments would be after graduation. That led to a $31 million reduction in federal undergraduate Stafford loan disbursements at Indiana universities.

Natalie Cahill, 22, in her final year in nursing at Indiana’s Bloomington campus, said she decided to seek more scholarship money and borrow less after seeing how much she was in line to pay after graduation. She also will use money from a summer hospital job to help cover costs.

“When you take out loans for the year, you just see a smaller number than the grand total,” Cahill told Bloomberg News. “Seeing the letter definitely put things into perspective.”

Wisconsin should give it a shot. More information about what students can expect to owe and pay after leaving school should encourage better financial decisions.

Besides sending letters with detailed loan and payment information, Indiana now requires returning students to confirm they want more loans on the school’s website. Reacting to rising default rates, Indiana also started a personal finance course, peer-to-peer advising and improved information on its website.

“I’m not surprised it drives down the borrowing once you know the consequences,” said Jim Kennedy, associate vice president and director of financial aid for Indiana schools. “If they know at all times their debt, and the repayment, it helps with a lot of planning.”

UW-Madison encourages students in person and online to check their loan details. But the Madison campus and other University of Wisconsin System schools don’t send letters detailing future payment amounts.

Not yet, anyway.

“We’re aware of it. We’re exploring it. We are interested in doing something similar,” said Jim Villa, vice president for university relations. “It’s a very good idea.”

Students seem to understand the many benefits of college. They also need a clear picture of the cost.